08 January 2010
Expatriate Property Ownership -- Indonesia...
The idea that expatriates (expats) may one day be able to own property in Indonesia has been tossed around for years. But, as is usually the way, nothing has become of those ideas until now. However, it would seem that there is still some ways to go before the ideas become reality. Yet, it is interesting to see that the State Department of Public Housing is making rumblings to the effect that there are moves afoot to loosen the prohibitions on expats owning Indonesian property.
The current state of affairs permits expats to take 25-year extendable (once) leases on property. There are other ways that expats go about "owning" a property in Indonesia. The most common of these is a nominee structure that involves the property being purchased by an Indonesian and then used as collateral in a loan agreement with the expat. This type of structure is one that is frequently used in Bali.
The current discussion appears to suggest that cities and special economic zones are the most likely areas to see the prohibitions eased. Nevertheless, the talk also suggests that the ownership of property in city areas is likely to be restricted to apartments. This in essence would mean that there is still likely going to be high demand for the nominee structure to remain if expats are more interested in a house as opposed to an apartment.
Yet, this is definitely a move in the right direction.
I guess time will tell whether there will be a full liberalization of the real estate sector that would allow foreigners to own property, and as much of it as they can afford. Maybe if the rules do change I might even be tempted to get into the market myself.